The company was founded by Don Burr, and several others, who resigned from Frank Lorenzo'sTexas International in order to do so. Burr was influenced by British airline entrepreneur Freddie Laker, whose forays into low-cost air travel attracted much press in the 1970s. Terminal space was leased at Newark Airport's North Terminal. The North Terminal was the primary passenger building at the airport until 1974 when Terminal A opened. Prior to People Express, the North Terminal was used by World Airways, and prior to the opening of Terminal C, North Terminal was used for international arrivals.

The airline used a simplified fare structure. All seats on a route were offered at the same price except for slightly-lower "off-peak" fares. All seats were in economy class except for "Premium Class" on overseas flights. Fares were paid in cash aboard the aircraft early in the flight. Passengers were permitted to bring one carry-on bag for free and each checked bag cost $3.00. People Express was the first United States airline to charge a fee for each checked bag. People Express also charged modest amounts for customers wanting food or beverages. Sodas cost 50 cents per can, honey-roasted peanuts and Rachel's brownies were also 50 cents, and the famous People Express "snak-pak" (an assortment of cheeses, crackers and salami) cost $2.

By June 1985, People Express had lost $5.8 million on operating income of $18.7 million.[1]

On August 2, 1985, the company announced it was launching daily Boeing 747 service between Brussels and Newark at the prices of $149; to promote the new route, fares were discounted to $99 until September 30.[1] By that time, the airline flew to 41 cities worldwide, with 4,000 employees and a fleet of 72 airplanes.[1]

The purchasing spree placed an enormous debt burden on the carrier at the same time major legacy carriers' improved yield management schemes enabled them to better compete with People Express fares.[citation needed] Integrating Frontier's operations caused labor struggles within the newly absorbed airline, and the change to a low-fare, no-frills mentality alienated Frontier's passengers.[citation needed]

Debt pressure on the carrier forced a change in philosophy, as People Express sought to lure business travelers who would pay higher fares. Aircraft cabins were redesigned to include a first-class section, a frequent flyer plan was initiated, and the simplified fare structure was abandoned in favor of the now-usual "revenue management" pricing.

The failed integration and enormous debt stretched People Express too far, and in June 1986, the company announced they were working with an investment bank to seek buyers for part, or all, of the airline. A deal to sell Frontier off to United Airlines fell through due to the inability of United to agree to terms with their unions on how to incorporate Frontier's staff, leading People Express management to cease Frontier's operations and file for bankruptcy protection for the subsidiary.

In the end, People Express was forced to sell entirely to Texas Air Corporation for roughly $125 million in cash, notes, and assumed debt. Due to concerns about regulatory approval for the purchase, Texas Air purchased the assets of Frontier from People Express in a separate transaction worth $176 million. People Express ceased to exist as a carrier on February 1, 1987, when their operations were merged into the operations of Continental Airlines, another Texas Air subsidiary, under a joint marketing agreement.

People Express' spartan, no-frills service earned the carrier several derisive nicknames, including "People Distress" and "Air Bulgaria" (a sarcastic reference to the poor customer service associated with Eastern Bloc countries during the Cold War).[2]

On the animated sitcom The Simpsons season 5 premiere episode "Homer's Barbershop Quartet", Homer Simpson says "People's Express introduced a generation of hicks to air travel," when talking about the year 1985.

The PeopleExpress headquarters were on the grounds of Newark International Airport.[8] The headquarters offices, described by the Miami Herald as "a maze-like bevy of small offices," were in an attic,[9] located on the second floor of the North Terminal.[10][11] The North Terminal first opened in 1953.[12] Before the arrival of PeopleExpress, the terminal was largely unused, although it had some charter flights departing and arriving there.[13] After the end of PeopleExpress, the Department of Veterans Affairs used the former terminal as a transfer point for casualties in the Gulf War.[14] In 1997 a project to demolish the North Terminal and redevelop the land was underway, with a cost of $50.1 million.[15]

^"On the Cheap." Miami Herald. May 1, 1983. 1F Business. "Finding someone at People Express' headquarters is not always easy. The company occupies a maze-like bevy of small offices chipped out of the attic above a terminal building at Newark International Airport."

^Kiefer, Francine. "At People Express the rush to profits never slows down." Christian Science Monitor. Monday December 19, 1983. 1. Retrieved on March 2, 2010. "Here on the second floor of the Newark International Airport, executives fly in and out of their tiny offices, cluster for a short while in the narrow hallway, and then suddenly disperse."

^Jouzaitis, Carol. "Sky the limit for People Express." Chicago Tribune. June 17, 1984. Start Page G1, 2 pages. Retrieved on March 2, 2010. "A little more than three years ago, Newark International Airport's North Terminal was a dusty, dilapidated, rodent-infested shell, abandoned by the airlines for new facilities nearby."

^"Slow Return as Hub for Aviation; After 67 Years, Newark's First Terminal Has New Life." The New York Times. April 27, 2002. B1, New York Edition. 2. Retrieved on March 2, 2010. "Ultimately, Building 51 was replaced by a new Newark terminal in 1953, which later became known as the North Terminal."